As discussed in last week's post, there are a number of life events that should trigger a review of your estate planning goals and documentation, including a marriage, divorce or death in the family. Often certain aspects of an estate plan are missed in a divorce, such as changing the beneficiary of a life insurance policy or bank accounts. Durable powers of attorney should also be updated along with the names on any trusts. This step also includes children who turn 18-years of age, as discussed in a post a few weeks back.
Do your loved ones have a durable powers of attorney should he or she become incapacitated and require a guardian to oversee his or her healthcare and financial decisions? Another, perhaps not so obvious event in life is the opening of a variety of new bank accounts, such as savings, retirement and investment accounts that may trigger an update to your estate plan.
Whenever you open a new account, whether a savings account, brokerage or mutual funds account, place these accounts in your trust along with your property and other assets. It will help you avoid costly probate and make the transfer of title to your beneficiaries that much easier. Establishing a trust allows family members a smooth transfer of assets by avoiding probate, as long as those assets are properly named in that trust.
And lastly, the addition of children into the family should trigger a review and update of your estate plan. Adding children, whether through adoption, birth or in the event of stepchildren through marriage may require a review of your estate documents to ensure proper guardianships are in place in your will, along with addressing any inheritance issues. Oftentimes when a second marriage takes place there is a blending of families that may require an update to both spouse's estate planning goals.
Don't make the mistake of ignoring your estate plan once you put it in place. It is important to remember certain events in your lifetime that may trigger a need for changes in either strategy or beneficiaries or both. There are changes in estate planning laws that could also trigger a change. Keep your estate plan up to date and your family will benefit from your thoughtfulness for years to come.
Source: Forbes, "5 life events that require an estate planning review," Michael Chamberlain, Aug. 13, 2012
Our firm is located in Huntington Woods, Michigan, and handles a variety of estate planning issues, including trusts, durable powers of attorney and probate litigation. Visit our probate and estate administration page to learn more.